Trade War: Will Trump’s gambling pay off?

In early March 2018, US President Donald Trump – given his erratic behavior – has once again brought the world closer to the edge of total uncertainty. He announced a series of strategic measures whose sole aim is to cement US national security in such a way that in the long run they will put the US at odds with the rest of the world.

On March 2nd the President announced that the US would impose tariffs of 25% on steel imports and tariffs of 10% on inbound aluminum shipments. “We are going to be instituting tariffs next week” Trump said, adding that “they would be in place for a long period of time.” One of the reasons given, was that cheap steel and aluminum imports were “decimating US producers.” He didn’t single out any country, but his words came as Chinese economic adviser Liu He and his delegation were due to meet with US Treasury Secretary, Steven Mnuchin, at the White House.

In its recent investigations into the national security risks represented by the global oversupply of steel and aluminum, the U.S. Commerce Department laid out an array of possible punitive options, including a tariff of around 25% on all steel imports and a lower tariff (10%) on aluminum imports. The EU Commission President Jean Claude Juncker called those tariffs a “blatant intervention to protect the United States’ domestic industry” by arguing that “the move had no national security justification.” Juncker said that the EU would “react firmly” to defend its own interest with a proposal for “WTO compatible countermeasures.” Some experts in Germany went however as far as arguing that they could balance Trump’s move by having Germany expend more on defense expenditures for NATO.

While China is considering restricting soybean imports, Japanese car giant Toyota warned that the US steel and aluminum tariffs would harm automakers and substantially increase the price of cars sold in the US.

Another demonstrative act by the US government was the presentation of its new “Nuclear Posture Review” end of January that had been originally ordered by the President January 27th 2017. The key message of the 74 page study is, that the US sees the biggest threat for its national security in new adversary states such as Russia, China, Iran and North Korea and those who might dare to acquire a more robust defense posture in the future.

The preface the study states that the idea was “to secure a safe, secure and effective nuclear deterrent that protects the homeland, assures allies and above all, deters adversaries.” Since the situation is more complex than ever after the end of the Cold War, the study argues, it is not possible to “delay modernization of our nuclear forces if we are to preserve a credible nuclear deterrent- ensuring that our diplomats continue to speak from a position of strength on matters of war and peace.”

The Study makes reference to the fact that in 1991 the Strategic Arms Reduction Treaty (START)barred its signatories from deploying more than 6,000 nuclear warheads – shorter range missiles were almost eliminated entirely from America’s nuclear arsenal in the early 1990ies. The 2002 Strategic Offensive Reduction Treaty and the 2010 New Start Treaty further lowered strategic and nuclear force levels to 1550 warheads. During that time, US nuclear weapons stockpile drew down by more than 85% from its Cold War high.

While Russia initially followed America’s lead and made sharp reductions in its strategic nuclear forces, it retained large numbers of non-strategic nuclear weapons, the study states, “today, Russia is modernizing these weapons as well as its other strategic systems. Even more troubling has been Russia’s adoption of military strategies and capabilities that rely on nuclear escalation for their success. These developments, coupled with Russia’s seizure of Crimea and nuclear threats against our allies, mark Moscow’s decided return to Great Power competition.” It further states that “China too is modernizing and expanding its already considerable nuclear forces. Like Russia, China is pursuing entirely new nuclear capabilities tailored to achieve particular national security objectives while also modernizing its conventional military, challenging traditional US military superiority in the Western Pacific. Elsewhere the strategic picture brings similar concerns. North Korea’s nuclear provocations threaten regional and global peace, despite universal condemnation in the United Nations. Iran’s nuclear ambitions remain an unresolved concern. Globally nuclear terrorism remains a real danger.”

In chapter II the Study quotes from Admiral Richardson, Chief of Naval Operations (“A design for maintaining Maritime superiority, 2017”) who spells out the reason for the present US concern – its fear to lose its “unilateral” security and defense superiority: “For the first time in 25 years, the United States is facing return to a great power competition. Russia and China both have advanced their military capabilities to act as global powers… Others are now pursuing advanced technology. Including military technologies that were once the exclusive province of great powers – this trend will only continue.”

The “return of great power competition”

The biggest preoccupation of the US is what the study calls “the return of the great power competition”: “Since 2010 we have seen the return of great power competition. To varying degrees, Russia and China have made clear they seek to substantially revise the post-Cold War international order and norms of behavior. Russia has demonstrated its willingness to use force to alter the map of Europe and impose its will on its neighbors, backed by implicit and explicit nuclear first use threats. Russia is in violation of its international legal and political commitments that directly affect the security of others, including the 1987 Intermediate –Range Nuclear Forces (INF) treaty, the 2002 Open Skies Treaty and the 1991 Presidential Nuclear Initiatives. Its occupation of Crimea and direct support for Russia led forces in Eastern Ukraine violate its commitment to respect the territorial integrity of Ukraine that they made in the 1994 Budapest Memorandum. (…) China meanwhile has rejected the ruling of the Permanent Court of Arbitration Tribunal that found China’s maritime claims in the South China Sea to be without merit and some of its related activities illegal under the UN convention and the Law of the Sea and customary international Law. Subsequently China has continued to undertake assertive military initiatives to create ‘facts on the ground’ in support of its territorial claims over features in the East and South China Seas.”

It is further stated that “while nuclear weapons play a deterrent role in both Russian and Chinese strategy, Russia may also rely on threats of limited nuclear first use, or actual first use, to coerce us, our allies and partners into terminating a conflict in terms favorable to Russia. Moscow apparently believes that the United States is unwilling to respond to Russian employment of tactical nuclear weapons s with strategic nuclear weapons.”

The study further warns that Russia is having significant advantages in its nuclear weapons production capacity and in non- strategic nuclear force over the US and allies. It is also building a large, diverse and modern set of non-strategic systems that are dual capable (may be armed with nuclear or conventional weapons). And that “Russia is also modernizing its long- standing nuclear armed ballistic missile defense system and designing a new ballistic missile defense interceptor.”

While Iran has agreed to constraints on its nuclear program in the Joint Comprehensive Plan of Action (JCPOA), absent extensive international actions many of the agreement’s restrictions on Iran’s nuclear program will end by 2031. In addition, “Iran retains the technological capability and much of the capacity necessary to develop a nuclear weapon within one year of a decision to do so. Were Iran to pursue nuclear weapons after JCPOA restrictions end, pressures on other countries in the region to acquire their own nuclear weapons would increase.”

US countermeasures

Response measures from the US include diplomatic measures (which at the moment are considered zero); economic measures, particularly sanctions. It is stated that the US has sanctioned Russian companies involved in the development and manufacture of Russia’s prohibited cruise missile system. In chapter V the review states that “United States will coordinate integration activities with allies facing nuclear threats,” and will examine opportunities for “additional allied burden sharing in the nuclear deterrence mission.”(…)

“Despite our best efforts to sustain a positive relationship, Russia now perceives the United States and NATO as its principal opponent and impediment to realizing its destabilizing geopolitical goals in Eurasia”, it states in chapter VI. (…) “The United States will make available its strategic nuclear forces, and commit nuclear weapons forward deployed to Europe, to the defense of NATO. These forces provide an essential political and military link between Europe and North America and are the supreme guarantee of Alliance security. Combined with the independent strategic nuclear forces of the United Kingdom and France, as well as Allied burden sharing arrangement, NATO’s overall nuclear deterrence forces are essential to the Alliance’s deterrence and defense posture now and in the future” (p 36). The United States must be capable of developing and deploying new capabilities, if necessary, to deter and assure and achieve US objectives if deterrence fails and hedge against uncertainty. The review “affirms the modernization programs initiated during the previous Administration to replace our nuclear ballistic missile submarines, strategic bombers, nuclear air launched cruise missiles, ICBM’s and associated nuclear command and control. Modernizing our dual capable fighter bombers with next generation f-35 fighter aircraft will maintain the strength of NATO’S deterrence posture and maintain our ability to forward.”

Sanctions as a revised model of George Kennan’s “Containment” strategy against Russia

One of the Anti-Russian measures referred to in the study includes broad economic sanctions. Very devastating sanction laws were announced end of August 2017 by the US government which not only are aimed at Russian financial, military industrial complex interests but which also target third countries like Germany.

Germany’s involvement in Russian energy projects such as Nord Stream 2 project is considered an impediment to the US-Russia and US-energy policy. It is indeed worthwhile to study an article that was written end of 2017 by Professor Otto Luchterhand for the prestigious “Ost –Magazin” (Ostinstitut Wismar) under the title: “Russia, North Stream 2 and the new US sanctions”. The article pays special attention to the US “Countering America’s Adversaries through Sanctions Act”, which got signed by the US President August 2nd, 2017. The Anti Russia Sanctions Act that was overwhelmingly passed by US congress, demonstrates as the author documents, that the new US-Russia policy is nothing but the revival of the famous “Containment” and “Roll back” strategy after World War II (both strategies were formulated in 1947 by George Kennan in Foreign Affairs, determining the US strategy vis a vis Russia during the entire Cold War period, and in 1952 by John Forster Dulles’ concept of “Roll back”). The impact of this “Containment” strategy against Russia becomes particularly evident in the second part of the sanctions law, which is entitled (sec 211 ff.) “Countering Russian influence in Europe and Eurasia Act of 2017.”

The author points out that a major part of the sanctions is directed against Russia’s defense, military – industrial complex and security services, as well against those who do business with Russia (sec 231) to “develop” its pipelines (sec 232). Also individuals and enterprises of other countries, like Germany or other EU states could become victims of sanctions. This pertains especially to the business in context of the construction and management of Russian pipelines if they have a market value of at least 1 Mio $ or will reach 5 Mio $ within 12 months. According to the author this is a direct hint at Germany and its involvement in the “Nord Stream 2 Project”. In sec 257 point (9) the US Sanctions Act states that the aim of the US policy is “to strengthen Ukraine’s Energy security.” “It is the policy of the United States …to continue to oppose the Nord Stream 2 pipeline given its detrimental impact on European Union’s energy security, gas market development in Central and Eastern Europe and energy reforms in Ukraine.”

The author recommends to read this paragraph together with the point (10) and the preceding points in order to interpret it in the right way. In those points, the following is stated: “ (7) to help Ukraine and United States allies and partners in Europe reduce their dependence on Russian energy resources, especially natural gas, which the Government of the Russian Federation uses as a weapon to coerce, intimidate, and influence other countries;

(8) to work with the European Union member states and European Union institutions to promote energy security through developing diversified and liberalized energy markets that provide diversified sources, suppliers and routes;

(10) that the United States Government should prioritize the export of United States energy resources in order to create American jobs, help United States allies and partners, and strengthen United States foreign Policy.”

The “Nord-Stream 2 Project” – if one follows the logic of the US Sanctions Law – is hence considered as a danger for a sustainable and overall reform of the Ukraine energy sector as well as for the EU Energy Union and for the US energy export to Europe which wants to promote the LNG exports extracted from fracking and transported by ship – and in this way create “American jobs.”

On 27th October the State department, on the basis of (sec 231) presented a list of 39 organizations and institutions in the area of defense and military industrial complex and security services of Russia.

The author concludes that the US Sanctions Act from August 2nd 2017, that refers to Nord Stream 2 Project is in clear violation of international law, given that sanctions cannot be imposed for “arbitrary” political aims and that the sanction law entitled “Countering Russian influence in Europe and Eurasia Act of 2017” is in reality aimed at “counter(ing) the political influence of Russia on EU Europe and in the Eurasian Space, especially in the Caucasus and in the Mideast and bring forth a new version of George Kennan’s “Containment” policy against Russia” (p 10).